Case number: 170516

Whether the University was justified under section 36(1) of the FOI Act in refusing access to records of contracts with certain companies and to records of payments to those companies

23  February 2018

Background

This review arises from a decision made by the University to refuse access to records relating to a request to which section 38 of the FOI Act applies. Section 38 applies to cases where the FOI body has decided that the record(s) in question are exempt under one or more of the relevant exemptions in the FOI Act (i.e. sections 35, 36 and 37, which apply to information that is confidential, commercially sensitive, or personal information about third parties, respectively) but that the record(s) should be released in the public interest.

Where section 38 applies, the FOI body is required to notify an affected third party before making a final decision on whether or not the exemption(s), otherwise found to apply, should be overridden in the public interest. The requester, or an affected third party, on receiving notice of the final decision of the FOI body, may apply directly for a review of that decision to this Office.

On 13 February 2017, the applicant made an FOI request to the University for:

  • A copy of the successful bid documents and tender reports relating to any contract or service agreement awarded to any of five specified companies including any instance where the party to the agreement was a subsidiary of the University.
  • All transactions between the University or its subsidiaries and any entity using a particular VAT number.
  • A print out of all purchase order details related to any of the five specified companies.
  • A copy of any contract or service agreement between the University or any of its subsidiaries and the five specified companies.
  • The details of all sums paid to the five companies.

The University's initial decision on the request was annulled by this Office on 11 July 2017 because of procedural failings (Case No. 170332 refers). The request was remitted to the University for fresh consideration.

On 30 August 2017, the University made its decision, having consulted with relevant third parties under section 38 of the FOI Act and provided them with copies of the records it had identified as relevant to the request. The decision said that the request was being refused under sections 36(1)(b) and 36(1)(c) of the FOI Act (commercially sensitive information, and information that could be prejudicial to negotiations). On 7 November 2017, the applicant made an application to this Office for a review of the University's decision.

I regret that the process has taken so long to bring to a conclusion since the applicant's initial request over a year ago. I am now concluding the review by way of binding decision. In carrying out my review, I have had regard to the above correspondence; to correspondence between this Office, the University, the third parties and the applicant and to the content of the records. 

Scope of the Review

When this Office sought copies of the withheld records, the University provided a copy of a printout that it says contains both purchase order details and sums paid to the companies (parts 3 and 5 of the request refer). The records date from 2012 to 2015. It also provided records comprising contracts for service with two of the companies (part 4 of the request refers). It said that it holds no records relevant to parts 1 and 2 and no contracts or service agreements with the other three companies.

Section 15(1)(a) of the FOI Act provides for the refusal of a record that does not exist or which cannot be found after reasonable searches. It seems, therefore, that the University refused to grant access to records relevant to parts 1 and 2, and to further contracts or service agreements relevant to part 4, under section 15(1)(a) rather than under sections 35, 36 or 37. Section 38 does not apply to parts 1 and 2 of the request in such circumstances. As the applicant has been made aware, he must seek an internal review in relation to those  records before this Office can accept an application for review of the University's refusal of access to them. 

Accordingly, this review is confined to whether or not the University has justified its refusal of the printout relevant to parts 3 and 5 and the two contracts relevant to part 4.

Analysis and Findings

Section 22(12)(b) of the FOI Act provides that a decision to refuse to grant an FOI request shall be presumed not to have been justified unless the head of the relevant public body shows to my satisfaction that its decision was justified. This burden of proof was made clear to the University in the course of this review. The FOI Act also gives potentially affected third parties a right to make submissions to me in cases such as this and their submissions must be taken into account before a decision is made that might affect their interests.
Sections 36(1)(b) and (c) - Commercially Sensitive Information and Negotiations of Third Parties

General Requirements
Section 36(1)(b) is a mandatory exemption that must be applied to certain types of information whose disclosure could reasonably be expected to result in a material financial loss or gain to the person to whom the information relates, or could prejudice the competitive position of the person in the conduct of his or her profession or business or otherwise in his or her occupation. Section 36(1) does not apply if the public interest would, on balance, be better served by granting rather than by refusing the request (section 36(3) refers).
The essence of the test in section 36(1)(b) is not the nature of the information but the nature of the harm which might be occasioned by its release. The harm test in the first part of section 36(1)(b) is that disclosure "could reasonably be expected to result in material loss or gain". The Commissioner takes the view that the test to be applied is not concerned with the question of probabilities or possibilities but with whether the decision maker's expectation is reasonable.

The harm test in the second part of section 36(1)(b) is that disclosure of the information "could prejudice the competitive position" of the person in the conduct of their business or profession. The standard of proof to be met here is considerably lower than the "could reasonably be expected" test in the first part of this exemption.  However, the Commissioner takes the view that, in invoking "prejudice", the damage which could occur must be specified with a reasonable degree of clarity.

In the High Court case of Westwood Club v The Information Commissioner [2014] IEHC 375 (the Westwood case), Cross J. held that it is not sufficient for a party relying on section 36(1)(b) to merely restate the provisions of the section, list the documents and say that they are commercially sensitive. A party opposing release should explain why disclosure of the particular records could prejudice their financial position. The High Court found that the Commissioner had erred in accepting the public body's claim that the information in that case was commercially sensitive.

Under the separate exemption of section 36(1)(c), access to a record must be refused where the disclosure of information contained in the record could prejudice the conduct or outcome of contractual or other negotiations of the person to whom the information relates. The standard of proof required to meet this exemption is relatively low in the sense that the test is not whether prejudice or harm is certain to materialise but whether it might do so. Having said that, the Commissioner expects that a person seeking to rely on this exemption would be able to show that contractual or other negotiations were in train or were reasonably foreseen which might be affected by the disclosure, and explain how exactly the disclosure could prejudice the conduct or the outcome of such negotiations.

A record that is exempt under section 36(1)(b) or (c) may be released if certain circumstances apply (section 36(2) refers), or if the public interest in favour of its release outweighs the public interest that it be withheld (section 36(3) refers).

Arguments of the parties
Although this Office invited the University to address the exemptions in detail, its submission did not make focussed submissions as to why it considered sections 36(1)(b) and (c) to apply to the records' contents. In its original decision, it stated its view that release of the records would impact negatively on the competitive position of the consultancies and on their ability "to undertake fair and meaningful future tendering for the provision of services".  The Investigator drew the attention of the University to published guidance and to previous decisions of the Commissioner on the requirements of these exemptions. Its submissions did address two queries that the Investigator had also put to the University. One query was why, having considered the third party submissions it received, the University ultimately decided that the public interest did not weigh in favour of release of any of the details in the records (in this regard, when initially notifying the third parties under section 38 of the Act, the University had considered that partial access to the records was warranted in the public interest). The University referred to views expressed to it by two of the third parties that the records were commercially sensitive. It said that, while it was open to partial release, it had "decided that it was appropriate to take account of such objections raised and therefore not to release the relevant records ... ".

The other query concerned a particular legal matter referred to in the University's emails to this Office that I do not consider it appropriate to disclose here. The Investigator asked the University to explain how the matter is relevant to the Commissioner's consideration of sections 36(1)(b), 36(1)(c) and 36(3) in respect of records setting out factual details of arrangements entered into and/or sums paid by the University. The University said that granting access to the records may exacerbate the matter and result in other outcomes, including expenditure, that would not be in the public interest.

This Office also invited submissions from the third parties. Only one  (Mr A) replied. He said that he did not consent to the release of the records on the basis that the information is commercially sensitive and its release will be prejudicial to the future of the company and would place it at a distinct disadvantage to its competitors in the marketplace.
I have also had regard to two submissions made to the University (by Mr B and Mr C) further to its consultations with the third parties. Mr B's submission of 25 July 2017 referred to a conversation that he had with the University further to its initial consultation with him. The University says it took no formal note of the conversation and that Mr B did not make a written objection to it at that time. Mr B's submission asked for his original concerns to be taken into account and that the University "only release non commercially sensitive data whilst also bearing in mind the detail of the actual requests." Mr C's submission of 2 May 2017 said that, for particular reasons that are not relevant to my consideration of section 36(1), he was objecting to the release of any and all information about him personally and the affairs of particular businesses.

Analysis and consideration of the public interest
The University has not provided any reasoning as to how or why the particular information meets the criteria of the section 36(1)(b) or (c)exemptions; neither has it addressed the content of the records . The fact that it does not wish to exacerbate the legal matter to which it referred does not, of itself, render the records exempt. In relation to section 36(1)(c), no negotiations have been identified that would enable me to find that they might be affected by the disclosure of the records. 

While some of the third parties have objected to release of the records, the FOI Act does not give them a right of veto. Furthermore, while Mr A's submission asserts that prejudice to his company would result from disclosure of the records, none of the paries have explained to me why they consider the records to be exempt under sections 36(1)(b) or (c) at this point in time. The third parties were effectively the successful tenderers paid for their services to the public body concerned and with FOI legislation in force now for almost two decades, the potential for the release of information held by the University should come as no surprise.

Following the judgment of the High Court in the Westwood case referred to above, I have no basis to find the records to be exempt under either section 36(1)(b) or 36(1)(c). Therefore, strictly speaking,, there is no need for me to go on to consider sections 36(2) or (3).  In any case, none of the provisions of section 36(2)  apply here. However, it is important to stress that even if I were to find the records to be exempt under sections 36(1)(b) or (c), I consider that the public interest #(section 36(3) refers) warrants their release in any event. I set out my reasons below.

Section 36(3) - The Public Interest
Section 36(3) provides for release of a record to which section 36(1)(b) or (c) applies where the public interest would, on balance, be better served by granting than by refusing to grant the request concerned.
On the matter of where the public interest lies, I have regard to the comments of the Supreme Court in The Governors and Guardians of the Hospital for the Relief of Poor Lying-In Women v The Information Commissioner,[2011] 1 I.R. 729, [2011] IESC 26) (the Rotunda case). It is noted that a public interest ("a true public interest recognised by means of a well known and established policy, adopted by the Oireachtas, or by law") should be distinguished from a private interest. Although these comments were made in relation to another provision of the FOI Act, I consider them to be relevant to consideration of public interest tests generally. Accordingly, any private interests that the third parties, or indeed the University, may have in objecting to the release of the records are not relevant to my consideration of section 36(3).
The applicant says that there is a need to ensure accountability and transparency in relation to public contracts and public funds. I agree that this is a public interest in favour of release.  The FOI Act recognises a public interest in ensuring the openness and accountability of FOI bodies. Furthermore, I wish to highlight the provisions of section 11(3) of the FOI Act which requires public bodies - of which the University is one- in performing their functions under the Act, to have regard to, among other things, the need to achieve greater openness in their activities, to promote adherence by them to the principles of transparency in government and public affairs and to strengthen their accountability. In my view, this need to enhance openness, transparency and accountability carries even greater weight in a case involving the expenditure of public monies. Decisions issued by this Office have made it clear that those entering into business arrangements with FOI bodies should have a diminished expectation of privacy or confidentiality in relation to those arrangements, particularly with respect to the payment to them of public monies. It is important to note that, in this case, the University has not to date granted access under FOI to any records relating to the contracts and payments at issue that would serve the public interest in openness and accountability.

 I note that in its decision to the applicant, the University pointed to a meeting of the Public Accounts Committee (PAC) on 22 June 2017 in the context of its advice that some information relevant to the request was in the public domain. I examined the minutes of that meeting in which the President of the University set out details of  severance payments to "two employees" identified only by the letters A and B together with total sums for "other arrangements" including Consultancy Agreements. However, the information from the PAC meeting was not released in records under FOI, it is not in the same form or detail that appears in the records and the entities involved are not identified.  Furthermore, it would appear from the President's statement to the PAC that inaccurate information had previously been given to the PAC by an official of the University in relation to consultancy payments.

The public interest in favour of release has to be balanced against the public interest, recognised by section 36(3) of the Act, in protecting the release of information to which section 36(1)(b) applies. I accept that there is a legitimate public interest in persons being able to conduct commercial transactions with FOI bodies without fear of suffering commercially as a result. The records from 2012 -2015, including contracts and  details of payments, concern the business affairs of the third party consultants. Nonetheless, there would be a particularly strong public interest in granting access to them to enable the assessment of matters such as whether the contracts were complied with and whether value for public money was achieved. The contracts include a description of the services to be given by the companies, the daily rates and total sums payable under  the contracts. They do not contain information such as margins, profitability or business models or other internal affairs of the companies involved.  I have considered whether the public interest would be served by release of the records in redacted form.  In my view, the details are essential to enable scrutiny of the arrangements entered into by the University and their release would be required in order to serve the public interest in openness and accountability. Accordingly, in the circumstances of this case,  I would consider the public interest in favour of release to outweigh any public interest there would be in protecting the companies' information. 

Finally, it is clear that the University does not want to exacerbate the legal matter to which it has referred. The University's concerns, while understandable, seems to me to be primarily a private interest separate from the right of access to the records at issue. In any event, I do not accept that those concerns add any significant weight to the public interest in protecting any information to which section 36(1)(b) or (c) applies. Neither would I agree with any contention being made that the weight of the public interest in openness and accountability regarding factual information about contractual arrangements entered into and public monies paid by the University is reduced in the circumstances.

Decision

Having carried out a review under section 22(2) of the FOI Act, I hereby annul the University's refusal of the records. I direct that they be released in full.

I specify that, subject to sections 24 and 26 of the FOI Act, effect shall be given by the University to my decision within five working days of the expiration of the 4 week period for the bringing of an appeal to the High Court from this decision as provided for at section 24(4) of the FOI Act.

Right of Appeal

Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.

Elizabeth Dolan
Senior Investigator